3 Federal Loopholes and Hypocrisies That Create Problems for the Cannabis Industry

Cannabis legalization is spreading across the United States, but it remains on a state level as the federal government continues to both look the other way but refuse to reschedule or outright legalize the drug. This inaction has created a series of loopholes and hypocrisies that have created a number of problems for the cannabis industry. Here are three glaring examples:

1. Where Do the Seeds Come From?

Since January 1, 2015, llinois universities have been granted the right to grow hempfor research purposes with a license from the Illinois Department of Agriculture. As the schools gear up for hemp production, however, one loophole in particular has been highlighted: obtaining seeds to grow the hemp they intend to study.

As we all know, it is federally illegal to transport hemp or cannabis in any form across state lines, and it’s also illegal to send them through the mail. Kentucky even sued the federal government last year after a shipment of hemp seeds intended for legal research purposes was seized by the Drug Enforcement Agency. Yet, those cannabis seeds must come from somewhere. And there is currently no stipulation in the law that indicates where the seeds may be procured or acquired, and no obvious legal alternatives.

The federal government has been largely silent on these issues, playing the cannabis game with a mostly laissez-faire attitude (or “hands-off,” for those of you who don’t speak French) but clearly taking action when they so choose.

2. Why Won’t Banks Work With Cannabis Businesses?

Last January, the federal government announced that legal cannabis businesses can now use the U.S. banking system. However, despite the feds’ “blessing,” most banks are unwilling to take on cannabusiness clients. In fact, the two largest American banks, Bank of America Corp. and J.P. Morgan Chase & Co., still refuse to work with cannabis companies due to the drug’s current Schedule I federal classification and illegality. Should the federal government be surprised that banks don’t trust their word until they can back up their assurance by reclassifying or outright legalizing cannabis?

3. Why Are Cannabis Business Being Penalized for Paying Their Taxes?

Dispensaries are also required to pay extremely high state and federal taxes, yet they are unable to process their payroll in a standardized fashion. They can’t generate pay stubs for employees as they are unable to open a business banking account for deposits, resulting in a lack of transparency for even the most basic accounting systems. On top of this, after being forced to run a completely cash-only business, dispensaries and recreational shops are then penalized for paying their taxes in cash.